ESCONDIDO: Padres evaluating ballpark sites, property purchases

DAVID GARRICK - dgarrick@nctimes.com

Investors trying to bring a San Diego Padres minor league teamto Escondido are evaluating four potential ballpark sites andnegotiating purchase prices for nearly 10 properties that couldbecome a nearby district of shops and restaurants, their attorneysaid last week.

Buying such properties could sway City Council members who have
been reluctant to spend about $50 million in taxpayers' money on
the ballpark without some concrete evidence that it would spur
significant connected development.

"It's going to come down to having available land for collateral
development, because if we don't have that land we won't have
anywhere for the new businesses to go," Councilman Sam Abed said
last week. "Having them just express interest in collateral
development is not enough assurance for me to move ahead."

Such skepticism, which has also been expressed by Councilwoman
Olga Diaz, has prompted the investment team led by Padres owner
Jeff Moorad to explore buying several properties near the possible
ballpark sites.

Dave Ferguson, a local attorney hired by the investment team to
explore ballpark sites, said each of the nearly 10 private property
owners he has contacted has expressed a willingness to sell at a
reasonable price.

Ferguson said he expects the investment team to choose a
ballpark site and decide which properties, if any, to buy within
the next two weeks.

Each of the possible ballpark sites is north of downtown, east
of Interstate 15 and south of Highway 78, he said.

Meanwhile, consultants hired by the investment team have begun
analyzing the proposed ballpark's effects on traffic, noise and
sewer capacity.

Such analysis is required by state law before construction canbegin on the ballpark, which would house a Triple-A affiliate ofthe Padres that now plays in Oregon.

In addition, city officials have been studying how many millions
they could generate by selling redevelopment revenue bonds, and
what the annual cost of financing those bonds would be.

Early estimates indicate the city could generate between $60
million and $80 million, Diaz said.

The extra $10 million to $30 million beyond the cost of the $50
million ballpark might be used to reimburse Moorad's investment
team for land purchases if another developer ends up handling the
connected development, Ferguson said.

It could also be used to clear the city's nearby public works
yard for a technology business park or other development.

City Manager Clay Phillips said last week that the interest rate
on the bonds would be between 6 percent and 7 percent, which would
make annual financing costs for the $50 million ballpark about $3.5
million per year.

If the city borrowed $80 million, the annual financing costs
would be about $5 million.

Phillips said he hoped to present the council with a
comprehensive financing proposal, which would also include a
precise ballpark location and potential sites for connected
development, on Nov. 18.

"If all the pieces come together, that's when I expect the
council to vote," Phillips said. "But there are pieces we don't
control."

Evaluating sites, property

One piece the city doesn't control is where the investment team
chooses to build the ballpark and any related development.

Ferguson said the four sites being evaluated include two
city-owned parcels: the parking lot of the city's arts center at
Woodward Avenue and North Escondido Boulevard, and a 10-acre,
city-owned parcel just north of the Sprinter railway and south of
Washington Avenue.

Ferguson declined to precisely identify the other two sites
because of ongoing real estate negotiations, but said they were
both near the city's Sprinter station.

He said one might be the 12-acre Escondido Swap Meet, which was
a key parcel in last fall's proposal to build a San Diego Chargers
stadium in Escondido.

City officials have said the fourth site would be along Quince
Street south of the Swap Meet, and that it might end up including
the 6-acre Sprinter maintenance yard.

Mayor Lori Holt Pfeiler said last week that city officials
recently began negotiating to buy that site from the North County
Transit District.

Ferguson said each site has pros and cons.

The arts center site would be closer to downtown than any other
site, which would alleviate concerns about building a ballpark
among industrial businesses, a problem the other three sites would
face.

But the arts center site would make any connected development
difficult, Ferguson said, because the only logical site for it ----
the half-built Paramount condo complex ---- would probably have to
become replacement parking for the spots the ballpark would
eliminate.

Ferguson said the arts center site would change the city's goal
for building the ballpark.

Instead of hoping to spur new development, the city would be
trying to bolster downtown and the arts center.

Using the 10-acre city parcel off Washington Avenue would reduce
land costs, but would create hurdles for additional development, he
said.

But if the investors buy private land next to that site, they
could have enough space to build a ballpark and some connected
development, he said.

The same would be true of the Swap Meet, which is farther from
the Sprinter but closer to Highway 78.

Ferguson said he's also been exploring the cost of building
parking garages in the area.

Such garages could house as many as 1,500 cars or as few as 300,
he said.

Ballpark financing

The entire ballpark proposal depends on the city's ability to
generate at least $50 million in immediate capital by selling
bonds.

Those bonds would be repaid with property tax revenue that the
city's redevelopment agency is expected to generate between now and
the agency's expiration in 2036.

Phillips, the city manager, said the amount of money available
has been complicated by two factors: the agency's remaining debt
from building the arts center and City Hall two decades ago, and
the legal question of whether building a ballpark for a privately
owned team jeopardizes the tax-exempt status of the bonds.

The remaining arts center debt, which will be paid off in 2019,
makes the bonds less attractive to investors, Phillips said.

It has increased the projected annual financing costs for $50
million in bonds from $2.8 million to $3.5 million.

Those annual costs would be as high as $5 million if the bonds
weren't tax-exempt.

But Phillips said city officials are confident that the ballpark
would qualify as a public use, partly because the city would own it
and the team would pay a lease.

However, the city's ownership of the park means the team
wouldn't pay property tax on the stadium, costing the city nearly
$400,000 per year.

But Mayor Pfeiler said the city and Moorad's investment team
were negotiating whether the city would be reimbursed for the
missing property tax.

Moorad and his investors have balked at providing the city any
revenue from the ballpark beyond about a $200,000 annual lease
payment.

The investors have said they need all revenue from tickets,
concessions and naming rights to operate the team.

Another possible financial hurdle is Abed's insistence that
Moorad's investors agree to something called a "cost cap," which
would require them to cover any ballpark construction expenditures
beyond the initial estimates.